Film Incentives

With Republicans poised to take control of the House and Senate and the state facing a $3.7 billion budget gap, it is unclear what actions -- if any -- lawmakers will take this year on incentives the state offers to the film industry. State economic development officials are expected to make the case that other states still have better incentive options, even after N.C. lawmakers signed off on increasing the number of credits a production can get from the state from $7.5 to $20 million last year. But in a year when a vise grip will be placed on the state's pocketbook, legislators might not be feeling generous about granting more perks for the industry. It's also unclear how hard film industry advocates will push for better incentives this year. It's possible that they will fear that a strong push toward stronger incentives could backfire with the incoming, GOP-controlled General Assembly. "If you get too greedy, you can kill the goose that laid the golden egg," said Rep. Danny McComas, R-New Hanover, who has pushed for improved film incentives.

State Commerce Secretary Keith Crisco said the additional incentives approved last year were an improvement, but they still don't reach the level of other states when it comes to attracting productions with big-name, high-dollar movie stars. The state currently allows only $1 million of a high-paid actor's salary to qualify for credits. "Therefore we limit the very big films with the very big stars," Crisco said. "Our competition, i.e. other states, many of them do not have that limit." House and Senate Republican leaders hold differing opinions on film incentives. Presumptive Senate leader Phil Berger, R-Rockingham, said he has long opposed the incentives, calling them a "direct subsidy of private enterprise" that's unfair to other state taxpayers. "I think ultimately, the economic circumstances are such that the state should not be doing that," he said. Rep. Thom Tillis, R-Mecklenburg, expected to become House speaker, said he has mixed feelings on incentives in general, but has supported film incentives in the past, including last year. "(The Wilmington area) is hurting, and there are a lot of people who believe that the film industry creates a lot of jobs out there, when you sit down and talk with them," Tillis said. "It's an argument that, in that particular case, won me over."

Crisco said that one possibility for this session would be to give film companies the flexibility to use the $20 million-per-film limit for whatever expenses they choose, including actors' salaries. That wouldn't increase the maximum amount a film could receive back from the state, but may help attract movies with big stars. Another option would be to raise the cap on actors' salaries eligible for incentives from $1 million to $5 million or $10 million per production. Crisco also said the state should review the economics of the industry and what it means to the state. Tillis said the best economic incentives the state could have are a lower tax rate and fewer regulations on business. The Republican-led legislature will work on that, he said. "Once we feel like we've become competitive from a tax and regulatory standpoint, you'll see fewer and fewer incentives because they simply won't be needed," Tillis said. (Patrick Gannon, WILMINGTON STAR-NEWS, 1/19/11).